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Where have all the savings gone?

The gradual mechanization of most of the American workplace has taken place over several centuries. But, in the years since World War II, unprecedented technological innovations have drastically and permanently changed that workplace.

The most profound consequence is the fact that in many industries, including much of agriculture, the number of needed workers is a fraction of what was required a half-century ago. Compared to the pre-WW II era, fewer hands are needed today to produce such widely consumed raw commodities or finished goods as a bale of cotton (as we know well here in the Delta), a suit of clothing, a box of cereal, a soft drink, a pair of shoes, a motor vehicle, a telephone or a television.

Even for newly minted gadgets such as desktop and portable computers and cell phones, technological breakthroughs mean fewer workers are needed to produce them, despite their complexity when compared to their information processing predecessors. While some production in those industries remains labor-intensive, robotics helps keep down the number of human workers needed.

On the service industry side of the labor force, technological breakthroughs have also meant that fewer workers are needed in various occupations that keep our economy going by making us more comfortable and our commerce and social life possible. Many modern service occupations themselves came into existence and grew in size because of technology. Yet, in recent years, service workers have also felt the downsizing effects of continuing technological change. For example, automated systems have replaced or drastically reduced the numbers of human telephone operators, office clerical workers, bank tellers, and the like. Even in the medical professions or in personal services aimed at the well-to-do and for which human-to-human contact is a more integral part of the task at hand, technology has reduced the numbers of workers needed per consumer.

Much evidence suggests that even when one factors in the rising costs of labor over the decades and the costs of purchasing and putting in place the newest technologies, big American businesses have reaped huge savings over the past half-century and more. The fact that American manufacturers long ago decided that they could further reduce their labor and overall costs and increase profits by moving their operations to Mexico or to Asia means that corporate savings are further compounded.

Where have all the savings gone? Who has really benefitted from these rather pronounced technology-induced changes? In the 1950s and 60s, many were inclined to think of the American worker as a primary beneficiary of those technology-wrought savings. Expanding industrial capacity seemed to counter some of the labor-reducing effects of technological change. Fewer hands were needed on a given site, but there were more and more work sites.

Much of the search among industries for cheaper labor pools was conducted largely within our own borders, as the south and west gained relocating northeastern industries. But by the 1970s, many economists began to talk of the effects of a de-industrializing American economy, whose effects were most obvious in the American “rust belt.” Hence, even before the current severe downturn in our national economy, America’s working men and women had felt the effects of corporate downsizing and outsourcing and the resulting mass layoffs.

Despite those dire outcomes, some argue that both technology and outsourcing, while reducing the number of jobs here at home, have reduced the costs of goods and services for American workers. Therefore they benefit in that way. To a great extent, Americans have indeed benefitted from the comparatively low costs of many of our basic consumer goods.

Yet, among those workers who have managed to hold on to their jobs, it is not at all clear just how much of the true economic savings from the ever-changing technologies within the American workplace have accrued to them due to reduced costs of living. And, to the extent that state, local and federal governments have access to the same cost-savings technologies seen in private industry, we must also ask ourselves why those cost savings have not led to greater reductions in the costs of the needed services we get from them.

Both the Occupy Wall Street and Tea Party gangs are on to something, as they each probe their versions of the “where have all the savings gone” question. Too bad they can’t get together on their symbolic marches to the Boston and New York harbors. Together they might change the nation.

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Darnell F. Hawkins received a doctorate in sociology from the University of Michigan and a law degree from the University of North Carolina. He currently lives in Pine Bluff after retiring from the University of Illinois at Chicago where he specialized in criminal justice.